An impressive jobs report out today from the U.S. Bureau of Labor Statistics (BLS) has far exceeded expectations, calmed fears of a looming recession, and closed out the year on a strong note.
Some key takeaways:
1. Job growth has been robust in 2019
With upward revisions to the two prior months’ reports and 266K jobs added in November, the economy has now added 180K jobs per month on average in 2019. That is only slightly below the 9-year average of 189K jobs per month. The economy needs to add about 105K jobs to keep pace with population growth and about 170K to sustain the impressive recent pace of labor force growth. It appears to have cleared both bars handily. Even when BLS figures are inevitably revised downwards in February when they are benchmarked to the larger and more reliable Quarterly Census of Employment and Wages (QCEW), which is pointing to slower growth, the overall picture is likely to remain one of healthy job gains.
2. Retail seasonal hiring lagged initially but caught up in November
According to seasonally unadjusted figures from the BLS going back to 2000, retailers increase payrolls by 3.25%, on average, between September and November each year for the peak holiday shopping season. Seasonal hiring lagged in October, but it now appears that retailers merely delayed holiday hiring without reducing it overall. They have now increased payroll employment by 4.0% since September–an impressive holiday season surge.
3. Manufacturing has had a slow year, but not a terrible one
Manufacturing has added 148K jobs per year on average since 2011, but only 56K jobs so far this year. That makes 2019 a far weaker year for manufacturing than last year, which saw 264K net gains, but much stronger than 2016, when manufacturing lost 7K jobs. In other words, the U.S. has largely managed to continue expanding manufacturing employment, albeit at a substantially slower rate, despite a trade war that raised manufacturers’ input costs and made it difficult to plan.
4. Steady wage growth is improving household balance sheets without causing the economy to overheat
After accelerating in 2018, wage growth has become stuck at around 3.1% per year. That is somewhat disappointing for observers who hoped that a tight labor market would push wage growth up to 3.5% and beyond. Nonetheless, wages are growing much faster than prices (inflation most recently measured just 1.6%). So workers are still seeing their balance sheets improve. That is leading to steady growth in consumer spending, which is boosting employment related to e-commerce, leisure, and hospitality, among other industries.
5. Employment growth is accelerating in education and healthcare
The education sector added 13.6K jobs in November, and well over 100K in the past 12 months. Employment growth in that sector is largely being driven by an expansion in elementary and secondary schools—likely the result of higher employment rates among prime working-age women. Equally impressively, the healthcare sector added 45.2K jobs in November, or well over 400K in the past 12 months. Offices of mental health physicians and practitioners continue to see the fastest growth within the sector, with employment in such establishments growing by more than 10% over the past year.